Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Thematic (Sector/Industry)

<ul>
<li>8697 Japan Exchange and retail facing brokers such as Matsui, SBI, and Monex may do better with Cboe +4.3% given the outlook for increased trading amid higher market volatility. </li>
<li>Japanese MedTech firms Terumo, Asahi Intecc, and Olympus underperformed globally. While FX plays a role, lower rates boost elective surgeries, making them prime candidates for a rebound.</li>
<li>NKY225 inclusion candidates 7453 Ryohin Keikaku and 7453 NRI look attractive as oversold longs as Index arbs will no doubt be rushing back as soon as the panic subsides.</li>
</ul>


8697 Japan Exchange and retail facing brokers such as Matsui, SBI, and Monex may do better with Cboe +4.3% given the outlook for increased trading amid higher market volatility. 
Japanese MedTech firms Terumo, Asahi Intecc, and Olympus underperformed globally. While FX plays a role, lower rates boost elective surgeries, making them prime candidates for a rebound.
NKY225 inclusion candidates 7453 Ryohin Keikaku and 7453 NRI look attractive as oversold longs as Index arbs will no doubt be rushing back as soon as the panic subsides.


Japan Morning Connection: 8697 JP, 7453 JP, 7453 JP

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The review period for the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.</li>
<li>
<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>'s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September. </li>
<li>Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.

Fast Retailing (9983 JP)'s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September. 
Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.


Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

Global Healthcare Strategist

Vincy Ip

<ul>
<li>Brain disorders, including various neurological and mental diseases, are the hidden danger with the largest social burden among all diseases. </li>
<li>With strong government support across the globe and accelerating private financing, we identify four key areas of investment opportunities in brain science, including neurotherapeutics, neurodiagnostics, neurosurgery, and brain-computer interface (BCI).</li>
<li>Even though the concept of BCI looks promising, its scalability, application, and monetisation potential remain uncertain in the near term and hence the invesmtent risks would be high. </li>
</ul>


Brain disorders, including various neurological and mental diseases, are the hidden danger with the largest social burden among all diseases. 
With strong government support across the globe and accelerating private financing, we identify four key areas of investment opportunities in brain science, including neurotherapeutics, neurodiagnostics, neurosurgery, and brain-computer interface (BCI).
Even though the concept of BCI looks promising, its scalability, application, and monetisation potential remain uncertain in the near term and hence the invesmtent risks would be high. 


Brain Science - An Opportunity or a Trap?

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.</li>
<li>
<a href="https://www.smartkarma.com/entities/tokio-marine-holdings-inc" target="_blank" data-smartkarma-citation="entities:7591:1" rel="noopener">Tokio Marine Holdings (8766 JP)</a> had a stake over US$100m in at least 33 listed Japanese stocks, amounting to a total of US$16.5bn.</li>
<li>In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.</li>
</ul>


The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.

Tokio Marine Holdings (8766 JP) had a stake over US$100m in at least 33 listed Japanese stocks, amounting to a total of US$16.5bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.


Tokio Marine Cross-Shareholding - At Least US$18bn of Cross-Shareholding to Sell

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>In Q3FY24, <a href="https://www.smartkarma.com/entities/asahi-intecc-co-ltd" target="_blank" data-smartkarma-citation="entities:15915:1" rel="noopener">Asahi Intecc (7747 JP)</a> reported 8% YoY increase in revenue to ¥26B, ahead of estimate of ¥24B, mainly driven by the exchange rate impact of higher foreign currencies.</li>
<li>Higher SG&amp;A expenses impacted the profitability. Q3FY24 operating profit margin declined to 23.3% from 26.6% in Q3FY23, while net profit margin decreased to 16.0% from 18.5% during the same time.</li>
<li>In Q4FY24, revenue is expected to decline 3% YoY to ¥19.6B. Operating and net profits are anticipated to plunge 74% and 26%, YoY to ¥417M and ¥832M, respectively.</li>
</ul>


In Q3FY24, Asahi Intecc (7747 JP) reported 8% YoY increase in revenue to ¥26B, ahead of estimate of ¥24B, mainly driven by the exchange rate impact of higher foreign currencies.
Higher SG&amp;A expenses impacted the profitability. Q3FY24 operating profit margin declined to 23.3% from 26.6% in Q3FY23, while net profit margin decreased to 16.0% from 18.5% during the same time.
In Q4FY24, revenue is expected to decline 3% YoY to ¥19.6B. Operating and net profits are anticipated to plunge 74% and 26%, YoY to ¥417M and ¥832M, respectively.


2024 High Conviction Update: Asahi Intecc (7747 JP)- Q3FY24 Margins Take Hit; Tepid Q4 Expected

Japan

Terumo Corporation is a manufacturer and supplier of pharmaceuticals and medical tools and equipment. The Company's products include health foods, transfusion and infusion equipment, disposable medical supply, clinical testing systems, artificial organs, and electronic thermometers. Terumo markets the products through its subsidiaries and sales offices in the US, Europe, and Asia.

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Terumo (4543 JT)

Japan Morning Connection: 8697 JP, 7453 JP, 7453 JP

Japanese brokers may benefit from increased trading with Cboe, MedTech firms could rebound, and NKY225 inclusion candidates highlighted as...

Andrew Jackson

Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

Review period ended yesterday. Fast Retailing's capping will result in a 0.9% drop in index weight. There could be 3 index changes with sector...

Brian Freitas

Brain Science - An Opportunity or a Trap?

We identify four key areas of investment opportunities in brain science, including neurotherapeutics, neurodiagnostics, neurosurgery, and brain...

Vincy Ip

Tokio Marine Cross-Shareholding - At Least US$18bn of Cross-Shareholding to Sell

Tokio Marine today announced that it aims to cut its cross-shareholding to zero by FY2029. It will aim to sell 50% of its holdings worth around...

Sumeet Singh

2024 High Conviction Update: Asahi Intecc (7747 JP)- Q3FY24 Margins Take Hit; Tepid Q4 Expected

Asahi Intecc reports 8% YoY revenue growth in Q3, but higher SG&A expenses dented profitability. Q4FY24 revenue is expected to decline 3% YoY with...

Tina Banerjee

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Japan Morning Connection: 8697 JP, 7453 JP, 7453 JP

​Japanese brokers may benefit from increased trading with Cboe, MedTech firms could rebound, and NKY225 inclusion candidates highlighted as...

Andrew Jackson

Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

Review period ended yesterday. Fast Retailing's capping will result in a 0.9% drop in index weight. There could be 3 index changes with sector...

Brian Freitas

Brain Science - An Opportunity or a Trap?

We identify four key areas of investment opportunities in brain science, including neurotherapeutics, neurodiagnostics, neurosurgery, and brain...

Vincy Ip

Tokio Marine Cross-Shareholding - At Least US$18bn of Cross-Shareholding to Sell

Tokio Marine today announced that it aims to cut its cross-shareholding to zero by FY2029. It will aim to sell 50% of its holdings worth around...

Sumeet Singh

2024 High Conviction Update: Asahi Intecc (7747 JP)- Q3FY24 Margins Take Hit; Tepid Q4 Expected

​Asahi Intecc reports 8% YoY revenue growth in Q3, but higher SG&A expenses dented profitability. Q4FY24 revenue is expected to decline 3% YoY with...

Tina Banerjee

Japanese brokers may benefit from increased trading with Cboe, MedTech firms could rebound, and NKY225 inclusion candidates highlighted as...

Asahi Intecc reports 8% YoY revenue growth in Q3, but higher SG&A expenses dented profitability. Q4FY24 revenue is expected to decline 3% YoY with...